Are We Being ‘Had’?

The price of beer — the subject that won’t go away — flared up again this week. Two sides of the argument were expressed eloquently by Phil (are we’re being swindled?) and Grace (don’t judge me for paying £4 a half), prompting the following thoughts.

But, on the other…
4. How people choose to spend their money is their business.
5. Market economics apply to beer: if it’s actually overpriced, i.e. priced beyond what people are willing to pay, it won’t sell. (But Brewdog’s bars, the Euston Tap, and the Craft Beer Co., et al, do seem to be busy…)
6. In a bar or pub, your money doesn’t buy a volume of liquid: it buys staff training, ambience, glassware, music licenses… do you think those are good value?
7. In the specific case of Brewdog, your money is probably also paying for the rapid expansion of their bar chain across the UK. Some people might consider that a subsidy worth paying; others will feel horrified.

Yesterday, we had a strong urge to go for a ‘posh beer’, just like we occasionally want a ‘posh meal’. Those occasional posh beers are part of a mixed diet of homebrew (practically free), supermarket beer (cheap) and cask ale in the pub (£2.60-3.40 a pint, generally). We were conscious of the price — £6.75 for a bottle of Great Divide Yeti, for example, did cause us to raise our eyebrows — but made an informed decision to indulge ourselves. The price was on prominent display, we were under no pressure, and there was a ‘cheap’ option — lager at £3 a pint.

We’re also conscious that the Hand Bar in Falmouth is out on a limb, selling this type of beer further west than anyone else, in a market otherwise dominated by Skinner’s, St Austell and Sharp’s. We don’t get the impression the owner of the bar is getting rich off this; we wonder if he’s even making a living.

So, in conclusion, we don’t think we were being had — we were choosing to take part in a transaction, with our eyes open.

But then if you do buy a £9.00 bottle of imperial stout and it’s disappointing you are going to feel like a right old chump for wasting money like that. More so then if you’d stayed on the session bitter!

Market prices affect us all as the effect is general not particular. If brewers believe they can jack prices, they will across the board. Happened with the faux hop crisis of a few years ago. Price never came down again. But I am talking about retail and not at a pub. I can’t afford to spend about 4x the home price of beer very often. Baby needs new shoes, after all. Happy to pay for the good pub experience when I can afford it. Paid $46 for am 11 pm 750 ml of Louis Pepe 2005 gueuze the other week at beerbistro in Toronto to share with someone as a thanks. I might do that once a year.

Markets can also be affected by concepts like “community” and “lifestyle” so that the overall branding becomes associated with irrelevant concepts that encourage opting in as opposed to buying a product. Consider how this brewery executive guy is suggesting that the conversation about good beer needs to be controlled. Good beer is more of a manipulated market than an open one. After all, it is only malt, hops, yeast and water.

Points 4 and 5 are often advanced as if they were conclusive argument-stoppers, when in fact they’re anything but. If we were arguing about the behaviour of chlorine atoms or fruit flies, appeals to what they actually do would carry a lot of weight. But we’re talking about people, who make decisions on the basis of a whole range of beliefs and inclinations, some rational, some not. It’s up to everyone how they spend their beer money – but all those people are making more-or-less informed decisions, and there’s no reason why I (or anyone else) shouldn’t try and influence them.

As for point 5, it’s a bit like why economists never look down when they’re walking – because if there was a £5 note on the ground, somebody would have picked it up already. Markets reach equilibrium, it’s what they do – but it’s quite possible for a big and profitable market to be established selling stuff for far more than it’s worth, as long as you can persuade enough people that (for whatever reason) it is worth it. (If you don’t believe me, go into a Spoons some time and order a pint of Heineken.)

I don’t dislike BrewDog as a brewery – I absolutely bloody love[d] some of their beer (past tense because it was on cask). But look – you go into a bar and the cheapest thing on sale is a keg pale ale clocking in at 3.8%, which is £3.80 a pint, and it’s got the words “dead pony” in the name. And a half costs significantly more than half the price of a pint. And the line on the glass is in the middle of the head. How would all this not leave a bad taste? All of these are things I don’t want to see ever again (or not without adjusting for inflation), and I particularly don’t want other bars to get the idea that things like this are OK.

I’ve paid silly money for beer in the past, incidentally, and haven’t always regretted it – £4.50 for a 330ml bottle of the original Marble Decadence was well worth it. But I think there’s a lot of over-priced brewerly self-indulgence around. If you can get a stone-cold classic like Westmalle Tripel for three quid, how good should a £10 bottle be?

Just wanted to come back, briefly, on the point about the proprietors of craft beer bars not making a fortune (yer man from Euston said something similar on Twitter). I’m sure that’s true, but where does that leave the proprietors of all the many other places where you can get excellent beer for £2.60-£3.40 a pint? Something’s not adding up – it can’t all be the transatlantic shipping costs.

Phil – not sure we’re that far apart, really. From your description it doesn’t sound like the sort of place I’d want to go, and so I wouldn’t spend my money there. We haven’t been to the Brewdog bar in London yet, even when we had the chance – while we are not averse to spending silly amounts on beer from time to time, part of our informed decision will be based on whether we will enjoy the experience of being there. (Point 6 – if it was just about the money we’d stay in and drink bulk-buy Westmalle, and in fact, often do).

“In the specific case of Brewdog, your money is probably also paying for the rapid expansion of their bar chain across the UK.”

It’s probably also subsidizing Tesco. People buying beer for silly money in the bars are keeping the cost down for those buying four packs of Punk along with their ready meals and yoghurt. Seeing as Carling couldn’t achieve a price rise against the power of the supermarkets, I doubt Brewdog can charge Tesco what they like either.

You should find a few financial statements of the small end of breweries listed on the stock market and check out the after tax profits. In Canada we have around 50% taxation within the price of beer as well as a history of few breweries actually failing. This just goes to prove the point that people are quite happy to pay for the pleasure fluid. Heck, if people were really concerned about price we’d all be home brewers.

In 1997 ‘super premium’ Grey Goose was ‘designed’ for the US market. The whole idea was that since it was ‘just alcohol and water’ (according to Sidney Frank) they could charge $30/bottle, $10 (ish) per bottle over and above the first ‘premium’ vodka, Absolut. 200, 000 cases sold in 2000, 1.4m in 2007 at the time of a sale of the company to Bacardi for US$2 billion.

That $10 difference marked it out as a ‘different’ product. Its very expense was what made people want to buy it.

Two things strike me: “If brewers believe they can jack prices, they will across the board. ” Rather a good thought, though it should be brewers/publicans.

“I think there’s a lot of over-priced brewerly self-indulgence around.” Yes indeed. While you can’t fool all of the people all of the time, you can fool enough to make a few quid. Which leads to “it’s quite possible for a big and profitable market to be established selling stuff for far more than it’s worth, as long as you can persuade enough people that (for whatever reason) it is worth it. “.

It is also a slightly sly argument to say it is up to the individual. What people do affects the market in general. For me there is a price I just won’t pay. I don’t know what it is, but recognise it when I see it.

As an aside I’d bet that the real reason for BD dropping cask is that they can make far more money by overcharging for keg. That’ssubtle market manipulation. And yes, you are subsidising Tesco by buying BD as Barm says.

We suspect the main reason Brewdog dropped cask, and won’t do top-ups, and all that jazz, is because they’ve identified their target market as people who not only aren’t bothered about those things but also, in fact, have a vague prejudice against CAMRA and ‘CAMRA types’. That Phil didn’t like BD Manchester, and that we’re not over-keen to visit a Brewdog bar, is exactly the effect they want to achieve. They don’t want us to ‘get it’ and buy in: they want us to piss off the the Bree Louise.

When I meet publicans, they tend to come across as people working like dogs to scrape a living, unable to go on holiday, driving old bangers and permanently on the verge of a breakdown. (The odd exception aside — usually those who have the nerve to charge £3.40 for a pint of cask ale.) If they want to ‘jack prices’ (i.e. charge what they can get away with while maintaining the same level of business) I can’t personally, honestly blame them.

On the general point that it’s possible to create markets selling stuff at way over its actual, intrinsic value (Hmm, intrinsic value: discuss…), I don’t think we’re in disagreement. What we’re saying above is that we, personally, don’t think we’re being fleeced: we chose not to pay £21 for a Brewdog rarity at the Hand Bar because we suspected it wouldn’t be good value for money and that we were being charged extra for puff and fluff.

That’s the only power individuals really have in market: to opt out, and spend their money on other things.

Having people they don’t respect ranting at them just makes Brewdog/craft beer ‘believers’ feel patronised (as Jimbaud Turner puts it) and more convinced of their position. (Grace’s post expresses this well, I think.)

Was I ranting? What would a non-ranty version of the same opinions look like?

I believe (on the basis of my experience, which I can talk about at some length) that BrewDog make some great beer, and have in the past made some superb beer. I also believe (also on the basis of experience) that their beer isn’t brilliant enough to justify the price premium they put on it, and that kegging it is bad for the flavour.

Really, craft beer enthusiasts must be delicate flowers if they can’t bear to listen to comments like that – or if all they can say in response is “yeah well, that’s your opinion, now shut up”. And it’s not as if BD themselves walk on eggshells when they’re dishing out criticism, after all.

No, no, no, no, no. We’re people, not walking purses – the biggest power we have is to talk to one another. When somebody says “you shouldn’t buy X because of A, B and C”, answering “You spend money your way and I’ll spend it mine” isn’t arguing, it’s refusing to argue.

What do we do when we’ve heard your argument about why we shouldn’t buy X?

You argue back (as you in fact did (“paying for the experience” usw), so no complaints there). “I don’t think it is too expensive” or “I don’t notice an extra 20p here or there” or whatever is arguing back. “Don’t drink there if you don’t like it” isn’t. (It would be a great answer to “Help, I feel weirdly compelled to drink in a bar I hate, what should I do?”.)

Ah, yes — we challenged that argument when it came up. Not the first time recently we’ve seen people respond to a negative review of something with a variation on that, which misunderstands the point of criticism/review.

I suppose, in the case of your review of BD Manchester, there was a feeling that you went knowing you wouldn’t like it — that there were enough signals before you walked through the door or ordered a drink that it wouldn’t be your thing — and that you went prepared to write a scathing review. We didn’t get that impression, exactly, but let’s say we’d have been very surprised if you’d come out with two thumbs up and a big smile on your face…

What my post didn’t cover was the brand issue. When a brewer/brewery establishes a reputation as one of the best, I do certainly feel that pricing leaves the realm of reasonable and becomes inflated, sometimes to a ridiculous amount. Take Mikkeller beers – I love Mikkeller but I don’t know that £18 for a small ish volume bottle of beer is reasonable. In fact, I think it’s extortionate. But, as you said, people are willing to pay it.

The difference with craft beer compared to real ales is you have limited editions, collaborations, the problem of demand outstripping supply, all of which contribute to a market in which you can seemingly justify charging higher prices. Those are specific beers, usually bottles, though. I think that for keg and cask, places like the Euston Tap charge very reasonably, whereas other pubs are perhaps a little overpriced.

As I said in my post, though, if the quality is good enough, I’m happy to pay a ‘premium’ price for a beer.

Trouble is, it’s not clear what ‘premium’ actually means, and I think BD – and some others – are trading on that lack of clarity.

There are pubs (quite mainstream pubs) which specialise in malt whisky, and can sell you a good whisky for the same you’d pay for a whisky anywhere else (say £X), a range of unusually good ones for £1.5X, a few specialities for £2X-3X and a “most people don’t even know about this one” for £5X. Most craft beer bars work on a similar principle: go into Port Street or the Euston Tap and you can pay a ‘normal’ price for a pint, or you can pay a lot more if you want to.

What irked me – OK, one of the things that irked me – about BD Manchester was that they’d decided to raise both the floor and the ceiling of that price range, and shunt the distribution upwards accordingly: a couple at £1.5X, lots at £2X-3X. You end up thinking the more expensive beers are at ‘premium’ prices, by comparison with the bottom end of their price list, when in fact the bottom end is a ‘premium’ price compared to the pub down the road.

The question isn’t whether BD (or Mikkeller, or whoever) produce some genuine premium products, but whether everything they touch is a premium product. Put it this way: are some things BrewDog brew four or five times as good as the best thing you can find at the nearest Spoons? I think they probably are. Is everything BrewDog brew twice as good as the best thing you can find at the nearest Spoons? No, definitely not.

I don’t think BrewDog are trading on lack of clarity over what premium means. They are trading on their branding and marketing and fair enough to them for doing that.

I just had a look at the pricing in the different BD bars to see if they were consistent across location and it seems they are. Perhaps this is one of the reasons you took issue with it. For London, paying £4 for a drink (volume is irrelevant to me) is standard fare whilst I presume in Manchester their prices seem steeper.

I don’t think you can accurately compare the price of a pint in a Wetherspoons to a craft beer, be it BD or someone else. For one, Spoons can charge lower prices because they are a huge company who can purchase larger volumes, force down the price when purchasing, etc. It’s not really on a level with what BrewDog are doing.

Reading your blog post about BD Mancs, it seemed to me that you went there expecting to be disappointed and inevitably you were.

I don’t think BrewDog are trading on lack of clarity over what premium means. They are trading on their branding and marketing and fair enough to them for doing that.

But that’s exactly what I mean by ‘lack of clarity’ – BD are creating the perception that everything they turn out is ‘premium’ and merits a ‘premium’ price, with some lines being extra-specially premium. Getting out of cask is part of this – the novelty of ‘craft keg’ makes it easier to persuade punters to pay more.

Spoons can charge lower prices because they are a huge company

BD are brewing their own beer, kegging it themselves and selling it in their own bars – their overheads are production, transport and er, that’s it. I’m convinced that they could charge a lot less if they wanted to – certainly they used to charge a lot less for cask. I think they’ve made a shrewd commercial judgment of what the market will bear. It doesn’t mean we have to like it.

And I can’t agree with the last point – apart from anything else, I was actually pleasantly surprised by the quality of the beer. I’d had 5 a.m. Saint on keg before & found it a pale shadow of the old cask version; the Zeitgeist survived the treatment a lot better. From recent postings in other places I was prepared for a sharp intake of breath on the price front, but I actually felt more ripped-off than I was expecting.

Calling kegging of any variety a novelty is ridiculous. Magic Rock, Summer Wine, Brodies, Steel City, Thornbridge and others all make sure of keg and/or KeyKeg. But I don’t want to get into a discussion over dispensation here because it is absolutely besides the point.

Comparing BD and Spoons is comparing chalk and cheese. I am not saying I think BD isn’t expensive because it is, no doubt. But punters are, by and large, happily paying that price because they DO deem the quality worth it. You evidently don’t, which is fine. I’d suggest not buying their beer in future if that’s the case.

The point about ‘craft keg’ is that it’s a break with the past, and specifically a break with the past 30-40 years of the real ale scene. ‘Craft keg’ brewers have created a new market niche with its own reference points & its own expectations in terms of price. This is what I meant by ‘novelty’ – whether BD went all out for keg this year, last year or in 2005 is less important.

punters are, by and large, happily paying that price because they DO deem the quality worth it

Sorry, but this is a non-argument. To quote my earlier comment:

“If we were arguing about the behaviour of chlorine atoms or fruit flies, appeals to what they actually do would carry a lot of weight. But we’re talking about people, who make decisions on the basis of a whole range of beliefs and inclinations, some rational, some not. It’s up to everyone how they spend their beer money – but all those people are making more-or-less informed decisions, and there’s no reason why I (or anyone else) shouldn’t try and influence them.”

I don’t think BrewDog are trading on lack of clarity over what premium means. They are trading on their branding and marketing and fair enough to them for doing that.

I just had a look at the pricing in the different BD bars to see if they were consistent across location and it seems they are. Perhaps this is one of the reasons you took issue with it. For London, paying £4 for a drink (volume is irrelevant to me) is standard fare whilst I presume in Manchester their prices seem steeper.

I don’t think you can accurately compare the price of a pint in a Wetherspoons to a craft beer, be it BD or someone else. For one, Spoons can charge lower prices because they are a huge company who can purchase larger volumes, force down the price when purchasing, etc. It’s not really on a level with what BrewDog are doing.

Reading your blog post about BD Mancs, it seemed to me that you went there expecting to be disappointed and inevitably you were.

Phil — but the point is that, unless you’re bringing new information or arguments to the table, people are making those decisions, in most cases, with their eyes open.

“Phil finds keg beer cold and fizzy” won’t change their mind (they/we don’t think it is); nor will “that’s bloody expensive”, because expensiveness is relative and subjective; “cask ale is even better and cheaper” is something people either disagree with or need to find out for themselves, and won’t come round to through being nagged or hectored.

What I actually said about the beer being on keg was that it improved massively when it had had a chance to warm up and gas out a bit. (I mean, massively – it was a different beer.) That is new information in your terms, I think. I haven’t had any responses to that point at all – possibly because “I don’t like keg,” says man who doesn’t like keg is easier to knock down.

The price thing’s a bit different – I think everyone knows by now that BD take a fairly cavalier approach to pricing, and mostly people put up with it. I don’t think people necessarily approve – I shouldn’t think anyone actually thinks it’s a good thing to stick an extra 15p on the price of a half, for example – but they put up with it, possibly because they think moaning would look petty and uncool. Hopefully my post will have done something to push back against that assumption.

Phil — sorry again! Not saying that you, personally, in particular, are hectoring.

It does sound a bit like what you’re saying is that, if people would only engage in an argument with you, you believe you could convince them not to like Brewdog’s bars through cold hard logic. Have I misunderstood that?

As for the extra 15p for a half… well, that’s a really interesting one. We’ve heard at least one pub landlord say they’d love to do that, but know it wouldn’t be acceptable to ‘traditional drinkers’. Someone drinking a half takes up as much space, uses as much electricity and water, and their glass needs just as much cleaning. So, from their point of view, it makes a lot of sense.

Our reaction to that bit of your post was, in the first instance, dismay, followed by a feeling that, actually, as long as the price for a half was marked up somewhere (was it?) then we wouldn’t mind. The shock/embarrassment would be a problem otherwise. (I actually have nightmares about getting to the checkout in a supermarket and not having enough money, but not as often as the ones about missing trains.)